Several retail chains on verge of bankruptcy after poor holiday sales

New York Post

A holiday continues to haunt America’s weaker retail chains. At least three more apparel chains — Wet Seal, Eastern Mountain Sports and Bob’s Stores — are running short of cash and on the verge of filing for bankruptcy protection, The Post has learned. A fourth chain, outdoor retailer Gander Mountain — some of whose vendors stopped talking orders — just hired financial adviser Lazard, several sources told The Post.

A Gander spokesman declined to comment. For Wet Seal — owned by Versa Capital, a private equity firm — a poor holiday made it impossible to obtain new financing, according to a recent regulatory filing. As a result, the ailing teen apparel retailer, is shutting its Irvine, Calif.

headquarters and closing its 171 stores. Meanwhile, EMS and Bob’s Stores — which, like Wet Seal, were bought out of bankruptcy by Versa less than a year ago — are running out of cash and could file Chapter 11 as soon as Friday, according to two sources familiar with the situation. Over the last several weeks, Versa tried unsuccessfully to sell both EMS and Bob’s, sources said.

“We are evaluating a number of strategic options. No decisions have been made,” Eastern Outfitters, the holding company that owns the chains, said in a statement. Bob’s operates 35 stores in the Northeast.

EMS, a chain, has shrunk to 53 stores from 69 last year. One telltale sign that they are headed south is that they didn’t place orders for the upcoming season at the Outdoor Retailer Winter Market conference earlier this month in Salt Lake City, according to Lowenstein Sandler’s Jeffrey Cohen, who was the lead lawyer for the chains’ creditors committee last year. “Word started to get around at the conference that they were in trouble again,” Cohen said.

Lenders are also not underwriting new orders for merchandise, according to one such banker in the apparel industry. “This subset of the sporting industry is having to pivot quite a bit,” Cohen said. “It’s been very tough for the vendors in this space.